The U.S. Department of Commerce has released the final ruling on its second review of the antidumping and countervailing duties (AD/CVD) rates on Chinese PV module imports for 2012. According to the decision, imports from major Chinese manufacturers will be affected by total rates ranging from 23.95% to 33.13%. In the preliminary ruling of the second review, some manufacturers were imposed with a CVD rate of 19.62%. The final ruling, however, has further reduced it to 19.2%. On the whole, the latest ruling does not have a huge impact on major manufacturers’ strategies for the U.S. market.

“Major module and cell suppliers have already set up production facilities outside of China and Taiwan to avoid AD/CVD,” said Corrine Lin, assistant research manager for EnergyTrend, a division of TrendForce. “For now, the only event that could influence the development of the U.S.-China solar trade dispute is the lawsuit between SolarWorld and Hemlock.”

Manufacturers such as Trina Solar, Jinko Solar, JA Solar, Hanwha and Vina Solar are now supplying products to the U.S. from their facilities outside China and Taiwan, thus circumventing the tariff barrier. Module prices in the U.S. in turn have declined considerably due to the flood of imports. EnergyTrend expects the average sales price of standard PV modules in the U.S. to fall 15% from US$0.6~0.62 per watt at the beginning of 2016 to US$0.48~0.52 per watt by the end of the year.

"Future reviews and rulings on AD/CVD are not expected to create too much uncertainty in the market, and manufacturers are utilizing their capacities according to the market demand,” said Lin. “Since manufacturers have increased their capacities significantly, finding orders for their products will be the most pressing issue.”

The AC/CVD reviews targets two separate years of Chinese solar imports, 2012 and 2014. The sunset review of the 2012 case will take place at the end of 2017, while the sunset review of the 2014 case will be arranged at the beginning of 2020. Based on this schedule, there are several possible scenarios for the development of the U.S.-China trade dispute.

Scenario 1: AD/CVD rates will decrease after each review irrespective of what happens to Hemlock’s lawsuit against SolarWorld

It is widely expected that the preliminary ruling of the first review of the 2014 case, which will occur sometime in early 2017, will lower the AD rates for Taiwanese cell suppliers. This scenario is based on the assumption that there will be no other external factors influencing the trade dispute.

“Either Motech or Sunrise will receive the lowest rate among the Taiwanese cell suppliers,” said Lin. “If Sunrise has the lowest rate, then it will able to export its high-end PERC products to the U.S. and tap into more sources of demand. On the whole, Taiwanese cell suppliers manufacturing products at home will see price premiums on their standard cells due to the lowering of their AD rates. However, their price premiums will be limited because cell and module production capacities that are installed outside Taiwan and China will be ready for mass production by next year. As for PERC, future rulings on the 2014 case will determine whether production in Taiwan or overseas will yield better profit.”

Scenario 2: The sunset review at the end of next year will completely eliminate the AD/CVD rates for the 2012 case

This scenario will put all manufacturers on the same footing, which is without being affected by AD/CVD. Companies that have set up facilities outside China and Taiwan, along with large and vertically integrated Chinese PV enterprises, will now face competition and may lose their hold on the U.S. market. If AD/CVD for the 2012 case was completely phased out at the end of 2017, Taiwanese cell suppliers that have already built factories overseas will have about just about a year to enjoy some price premiums resulted from the reduction of the 2014 AD rates. Plans for setting up production capacities overseas during 2017 will also be on hold because the costs of building plants and installing equipment will be difficult to recoup.

Scenario 3: Trade dispute will be resolved before the end of 2017; minimum price and volume agreements will control the imports of modules to the U.S. and polysilicon to China

Module prices in the U.S. will encounter steeper decline than the current downtrend if the U.S. and China remove their respective tariff barriers on module and polysilicon imports, or if both countries reach minimum price and volume agreements on these products. According to this scenario, module prices in the U.S. may fall close to the projected global average sales price of US$0.45 per watt in 2017. At the same time, spot prices in China’s polysilicon market will also drop more sharply compared with now.

China’s imposition of AD/CVD on foreign polysilicon imports has allowed domestic polysilicon manufacturers to expand their capacities during these two years. Opening up the market will lead to massive oversupply and plunging prices in 2017. Therefore, China is unlikely aggravate the situation in the domestic polysilicon market further by removing the tariff barrier.